Pa. bill would replace property taxes to fund schools

A similar proposal fell one vote short in the senate last year

School funding, levy - generic

HARRISBURG, Pa. (WYTV) – Paying for school with property taxes in Pennsylvania could be a thing of the past if one lawmaker gets his wish.

State Representative Jim Cox introduced the Property Tax Independence Act yesterday. The act would replace school district property taxes with other revenue sources.

Personal income taxes would go up almost 2 percent while the state sales tax would increase from 6 to 7 percent.

Lawmakers won’t consider the proposal until next year.

A similar proposal fell one vote short in the senate last year.

Highlights of the proposed plan appear below:

  • The Property Tax Independence Act will eliminate all school property taxes across the Commonwealth and will replace those taxes with funding from a single state source.
  • The Property Tax Independence Act will ABOLISH the school property tax on all homesteads, farmsteads, and businesses.
  • School property tax elimination will be accomplished via a two year phase-out of school property taxes. In the first year after enactment, school property taxes will be frozen at their current level; in the second year they will be completely eliminated except for a small portion that will be retained in each school district to retire the individual district’s outstanding long-term debt, typically 10% of the original school tax bill.
  • The sales tax, unlike the property tax that has no relationship to family income, it is directly tied to a person’s ability to pay.
  • The Property Tax Independence Act moderately broadens the base of the state sales tax to include more services and purchases at a new 7% rate. Items to be added to the taxable base include candy and gum, newspapers and magazines, dry cleaning and laundry services, haircuts, and spectator sports admissions. Food items not included on the WIC list and individual clothing and footwear items with a value greater than $50 will also be subject to the expanded sales tax. Generally, food items exempt from the sales tax will be fresh meats, produce, and dairy, along with many packaged and canned foods that are in their natural form, without added sugar or other adulterants. The complete list of newly taxed items and services is here as a PDF document.

Items that will continue to be exempt from the sales tax include food stamp purchases, all utilities, home heating fuels, health, hospital, and dental services, prescription drugs, home health care, tuition, day care, charitable organizations, and business-to-business transactions.